Emisphere Technologies, Inc. (OTCBB:EMIS) today reported financial
results for the fourth quarter and full fiscal year ended December
31, 2015, and provided an overview of corporate accomplishments and
plans.
“The last twelve months have been a pivotal time
for Emisphere,” said Alan L. Rubino, President and Chief Executive
Officer of Emisphere. “Novo Nordisk A/S (NYSE:NVO), our most
advanced collaborative partner, has commenced Phase 3a development
with oral semaglutide, a once daily treatment for Type 2 diabetes
which utilizes SNAC, one of our Eligen® Technology carriers. We
expanded on our collaborative partnership with Novo Nordisk during
the fourth quarter of 2015 with the execution of a new license
agreement for the development of oral formulations targeting major
metabolic disorders. These collaborations provide important
validation for our Eligen® Technology and its ability to facilitate
absorption from the gastrointestinal tract.”
Mr. Rubino continued: “We launched oral Eligen
B12™ Rx in March 2015 to positive physician and patient reception.
Throughout the year we evaluated our commercial operations and
resources in light of product sales levels, and determined that the
product’s full market potential may best be achieved by entering
into a strategic transaction or collaboration with a third party in
the United States and internationally. We are now squarely focused
on following that path and also seeking value creating partnerships
for our Eligen® Technology carriers.”
2015 AND RECENT HIGHLIGHTS
- Novo Nordisk commenced global Phase 3a clinical trials
for oral semaglutide. During the first quarter of 2016,
Novo Nordisk commenced Phase 3a testing for oral semaglutide, which
utilizes Emisphere’s absorption-enhancing monosodium
N-[8-(2-hydroxybenzoyl) amino] caprylate (SNAC) carrier. Novo
Nordisk plans to conduct ten clinical trials enrolling
approximately 9,300 patients with Type-2 diabetes in this Phase 3a
program. The advancement of oral semaglutide into Phase 3a
development represents a significant milestone for both Emisphere
and the Eligen® Technology platform and supports the Company’s
belief that products developed using Eligen® carriers have the
potential to overcome bioavailability challenges commonly
associated with the oral administration of peptides and certain
other compounds.
- Signed Expansion Development and License Agreement with
Novo Nordisk to develop oral formulations targeting metabolic
indications. In October 2015, Emisphere and Novo Nordisk
entered into a new license agreement to develop and commercialize
oral formulations of four classes of Novo Nordisk's investigational
molecules targeting major metabolic disorders, including diabetes
and obesity, using Emisphere's oral Eligen® Technology. Emisphere
received a $5.0 million upfront licensing fee, and is eligible to
receive up to $207 million in development and sales milestone
payments in addition to royalties on sales of each successfully
commercialized product under this agreement.
- Amended the GLP-1 License Agreement
with Novo Nordisk. This third amendment provides
for, among other things, a payment of $9.0 million to Emisphere
from Novo Nordisk as prepayment of a product development milestone
in exchange for a reduction in certain future royalty payments that
would have otherwise become payable to the Company under its 2008
GLP-1 Development License Agreement with Novo Nordisk.
- Launched Eligen B12™ in the U.S. market.
Eligen B12™ is the first and only once-daily oral prescription
medical food tablet shown to normalize B12 levels without the need
for an injection. Eligen B12™ is indicated for the dietary
management of patients who have a medically-diagnosed vitamin B12
deficiency, associated with a disease or condition that cannot be
managed by a modification of the normal diet alone. Eligen B12™
utilizes Emisphere’s SNAC carrier to chaperone B12 through the
gastric lining and directly into the bloodstream even in the
absence of intrinsic factor, a protein made in the stomach that
normally facilitates B12 absorption.
- Global Eligen® Technology Business Development
Initiatives Continue. During 2015, Emisphere commenced a
comprehensive business development initiative designed to identify
and secure new Eligen® Technology partnerships. Eligen® Technology
is a proven delivery system technology that is applicable to a
broad range of chemical entities and has been shown to increase the
benefit of the therapy by improving bioavailability or absorption
or by decreasing time to onset of action. The Company currently
owns rights to an extensive portfolio of carriers with strong
patent protection. The current focus of the business development
initiative is on next generation, smaller proteins and peptides,
proven and/or approved drug compounds, and the development of new
oral formulations to replace injectables.
- Grant of Waivers and Extensions under Debt Facility,
Convertible Notes and Reimbursement Notes. During November
2015, the creditor under our debt facility, convertible notes and
reimbursement notes agreed to waive any event of default resulting
from our failure to satisfy the net sales milestones for the Eligen
B12™ product for the 2015 fiscal year specified in our credit
facility and convertible notes. The creditor has also agreed to
extend the date by which we are required to use 50% of the $14
million received from Novo Nordisk to pre-pay certain loans and
notes until April 6, 2016. We believe that our current cash balance
will provide sufficient capital to continue operations through
approximately June 2016. However, if the pre-payment obligation is
further extended or waived, the Company will have sufficient cash
to operate through approximately June 2017.
FOURTH QUARTER 2015 FINANCIAL
RESULTS
Emisphere reported a net loss of $10.1 million,
or ($0.18) per basic and diluted share, for the quarter ended
December 31, 2015, compared to net income of $0.4 million, or $0.01
per basic and diluted share, for the quarter ended December 31,
2014.
The Company reported an operating loss of $4.2
million for the fourth quarter 2015, compared to an operating loss
of $3.3 million for the same period in 2014.
Total operating expenses were $3.6 million for
the fourth quarter 2015, an increase of $0.3 million or 9.9%
compared to the same period in 2014. Total operating expenses
include research and development costs of $0.1 million compared to
$0.2 million in 2014, and selling, general and administrative
expenses of $3.5 million, an increase of $0.5 million or 16.7%
compared to the same period in 2014. Other expense for the fourth
quarter of 2015 was $6.5 million compared to other expense of $3.4
million for the fourth quarter of 2014.
FULL YEAR 2015 FINANCIAL
RESULTS
Emisphere reported a net loss of $40.4 million,
or ($0.67) per basic and diluted share, for the year ended December
31, 2015, compared to a net loss of $25.4 million, or ($0.42) per
basic and diluted share, for the year ended December 31, 2014.
Total operating expenses were $17.6 million for
the year ended December 31, 2015, compared to $9.3 million for the
year ended December 31, 2014, an increase of $8.3 million or 89.3%.
Total operating expenses include research and development costs of
$0.5 million (a decrease of $0.7 million or 57.9% compared to
2014), and selling, general and administrative expenses of $17.1
million (an increase of $9.0 million or 110% compared to 2014).
Other expense for the year ended December 31,
2015, was $22.9 million, compared to other expense of $18.1 million
for the year ended December 31, 2014. The $4.8 million increase was
due primarily to a $2.0 million increase in the fair value of
derivative instruments, and a $2.7 million increase in interest
expense.
During 2015, Emisphere recognized a state income
tax benefit of approximately $0.6 million as a result of proceeds
from the sale of $7.1 million of New Jersey net operating losses
through the Technology Business Certificate Transfer Program,
sponsored by the New Jersey Economic Development Authority.
Weighted average basic and diluted shares
outstanding for the years ended December 31, 2015, and December 31,
2014, was 60,687,478.
LIQUIDITY
As of December 31, 2015, Emisphere had
approximately $12.9 million in cash, a net increase of $9.2 million
from December 31, 2014, approximately $7.1 million working capital
deficiency, a stockholders' deficit of approximately $151.9 million
and an accumulated deficit of approximately $554.5 million.
Our loss from operations was $18.1 million,
$9.3 million and $7.6 million for the years ended
December 31, 2015, 2014 and 2013, respectively. Our net loss
was $40.4 million, $25.4 million and $20.9 million for
the years ended December 31, 2015, 2014 and 2013,
respectively. Our net cash provided (outlays) from operations and
capital expenditures were ($2.8), ($8.4) million and
$3.1 million for the years ended December 31, 2015, 2014
and 2013, respectively. Net cash provided include receipts of
deferred revenue of $14.6, $0.0 million and $10.0 million for 2015,
2014, and 2013, respectively. Our stockholders’ deficit was
$151.9 million and $112.0 million as of December 31,
2015 and 2014, respectively. As of December 31, 2015, the Company’s
obligations included approximately $46.5 million (face value) under
its Second Amended and Restated Convertible Notes (the “Convertible
Notes”), approximately $22.8 million (face value) under a loan
agreement dated August 20, 2014 (the “Loan Agreement”),
approximately $0.8 million (face value) under its Second Amended
and Restated Reimbursement Notes (the “Reimbursement Notes”), and
approximately $2.1 million (face value) under its Second Amended
and Restated Bridge Notes (the “Bridge Notes”). The Convertible
Notes and the Loan Agreement are subject to various sales,
operating and manufacturing performance criteria.
In the event that we do not satisfy annual net
sales targets of Eligen B12™ by December 31 for each fiscal year
beginning 2015 through 2019, we will be in default under the Loan
Agreement and Convertible Notes, provided that we are not granted a
waiver. On November 10, 2015, the creditor under our Loan Agreement
and Convertible Notes agreed to waive any event of default
resulting from our failure to satisfy the net sales milestones for
the Eligen B12™ product for the 2015 fiscal year.
On October 26, 2015, we received a total payment
of $14 million from Novo Nordisk pursuant to, and consisting of, $5
million as payment for entry into the Expansion License Agreement,
and $9 million as payment in connection with the third amendment to
the GLP-1 License Agreement. Under terms of its loan agreements,
the Company is obligated to pre-pay certain loans and notes using
50% of any extraordinary receipts, such as the $14 million received
from Novo Nordisk. The creditor under our Loan Agreement and
Reimbursement Notes has agreed to extend the date by which we are
required to use 50% of the $14 million received from Novo Nordisk
to pre-pay certain loans and notes until April 6, 2016. However,
because such pre-payment deadline has not been extended beyond one
year from December 31, 2015, we have classified $7.0 million of the
loans and notes as a current liability as of December 31, 2015.
We believe that our current cash balance will
provide sufficient capital to continue operations through
approximately June 2016. However, if the pre-payment obligation is
further extended or waived, the Company will have sufficient cash
to operate through approximately June 2017. The Company’s future
capital requirements beyond June 2016 (or June 2017, in the event
the pre-payment obligation is further extended or waived) and its
financial success depend largely on its ability to raise additional
capital, including by leveraging existing and securing new
partnering opportunities for Eligen B12™ and for the Eligen®
technology.
If the Company fails to generate sufficient
capital from operations, strategic transactions, new or existing
partnering opportunities, or other sources prior to June 2016 (or
June 2017, in the event the pre-payment obligation is further
extended or waived), it will need to raise capital and risks
default under the terms of its existing indebtedness. If it cannot
raise new capital, it could be forced to cease operations. These
conditions raise substantial doubt about the Company’s ability to
continue as a going concern. Consequently, the audit reports
prepared by its independent registered public accounting firm
relating to its financial statements for the years ended
December 31, 2015, 2014 and 2013 include an explanatory
paragraph expressing substantial doubt about its ability to
continue as a going concern.
CONFERENCE CALL AND WEBCAST
INFORMATION
The live webcast of the conference call can be
accessed through the Company's web site at www.emisphere.com. The
call can also be accessed by dialing (877) 303-9483 (United States
and Canada) or (760) 666-3584 (international), and entering
Conference ID# 76758582. In addition, an archive of the webcast can
be accessed through the same link and an audio replay of the call
will be available beginning Tuesday, March 29, 2016 at 11:30 AM ET
through 11:59 PM ET on April 18, 2016, by calling (855) 859-2056
(United States and Canada) or (404) 537-3406 (International), and
entering Conference ID# 76758582.
ABOUT ELIGEN B12™
Eligen B12™ is indicated for the dietary
management of patients who have a medically-diagnosed vitamin B12
deficiency, associated with a disease or condition that cannot be
managed by a modification of the normal diet alone. Eligen B12™ is
designed so that patients only need to take a single oral tablet
(cyanocobalamin 1000 mcg/salcaprozate sodium [SNAC] 100 mg) of B12
daily.
Eligen B12™ is the first and only prescription
medical food that has been shown to normalize vitamin B12 levels
comparable to an intramuscular (IM) injection of B12. In a study
that compared the impact of Eligen B12™ and IM B12 on plasma B12
levels in 50 patients with demonstrated B12 deficiency (serum B12
<350 pg/mL), both products normalized B12 levels by Day 15
(first observation) and maintained normal levels over the duration
of the study (three months). In a study that compared
bioavailability in 20 healthy subjects of Eligen B12™ with that of
a standard oral B12 supplement, the bioavailability of Eligen B12™
was 5.09 percent compared with 2.16 percent, which is more than
double the bioavailability of the conventional over-the-counter
oral B12 supplement formulation at the same dose.
Eligen B12™ is classified by the U.S. Food and
Drug Administration as a medical food. A medical food is a
prescription product formulated to be consumed or administered
orally under medical supervision for the treatment of a disease or
condition that cannot be managed by a modification of the normal
diet alone.
For more information, visit
www.eligenb12.com.
ELIGEN B12™ IMPORTANT SAFETY
INFORMATION
Those with an allergy to B12, cobalt or any
ingredients of Eligen B12™ should not take this product. Eligen
B12™ should not be taken by people who have Leber’s disease, which
physicians may refer to as hereditary optic nerve atrophy.
Cyanocobalamin (B12) can lead to optic nerve damage (and possibly
blindness) in people with Leber’s disease. Note that Eligen B12™
has not been studied in patients below 18 years of age.
ABOUT EMISPHERE
Emisphere Technologies, Inc. (“Emisphere” or the
“Company”) is a pharmaceutical and drug delivery company. The
Company launched its first prescription product, oral Eligen B12™,
in the U.S. in March 2015 and we are currently engaged in strategic
discussions to optimize its economic value in the U.S. and global
markets. Beyond Eligen B12™, the Company utilizes its proprietary
Eligen® Technology to create new oral formulations of therapeutic
agents. Emisphere is currently partnered with global pharmaceutical
companies for the development of new orally delivered therapeutics.
For more information, please visit www.emisphere.com.
SAFE HARBOR STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
The statements in this release or oral
statements made by representatives of Emisphere relating to matters
that are not historical facts are forward-looking statements that
involve risks and uncertainties, including, but not limited to, the
sufficiency of the Company's cash position, the Company's ability
to enter into strategic partnerships, the Company's ability to
capture market share for oral Eligen B12™ or any potential
products, the success of the Company's commercialization
initiatives, the ability if the Company and/or that of its partners
to develop, manufacture and commercialize products using
Emisphere's drug delivery technology, and other risks and
uncertainties detailed in Emisphere's filings with the Securities
and Exchange Commission, including those factors discussed under
the caption "Risk Factors" identified in the documents Emisphere
has filed, or will file, with the Securities and Exchange
Commission ("SEC"). Copies of Emisphere's filings with the SEC may
be obtained from the SEC Internet site at http://www.sec.gov.
Emisphere expressly disclaims any obligation or undertaking to
release publicly any updates or revisions to any forward-looking
statements contained herein to reflect any change in Emisphere's
expectations with regard thereto or any change in events,
conditions, or circumstances on which any such statements are
based.
EMISPHERE TECHNOLOGIES,
INC.CONDENSED STATEMENTS OF
OPERATIONS
|
|
Year Ended December 31, |
|
|
2015 |
|
2014 |
|
|
2013 |
|
|
|
(In thousands, except share
and per share data) |
|
|
|
|
|
|
|
Net revenue |
$ |
|
411 |
|
$ |
|
- |
|
$ |
|
- |
|
Cost of goods sold |
|
|
892 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
Gross profit
(loss) |
|
|
(481 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
Costs and
expenses: |
|
|
|
|
|
|
Research and development |
|
|
475 |
|
|
|
1,128 |
|
|
|
836 |
|
General and administrative |
|
|
5,950 |
|
|
|
5,968 |
|
|
|
6,749 |
|
Selling expenses |
|
|
11,176 |
|
|
|
2,194 |
|
|
|
- |
|
Loss on disposal of fixed
assets |
|
|
- |
|
|
|
- |
|
|
|
10 |
|
Depreciation and amortization |
|
|
14 |
|
|
|
15 |
|
|
|
9 |
|
|
|
|
|
|
|
|
Total costs and
expenses |
|
|
17,615 |
|
|
|
9,305 |
|
|
|
7,604 |
|
|
|
|
|
|
|
|
Operating loss |
|
|
(18,096 |
) |
|
|
(9,305 |
) |
|
|
(7,604 |
) |
|
|
|
|
|
|
|
Other non-operating
income (expense): |
|
|
|
|
|
|
Investment and other income |
|
|
12 |
|
|
|
10 |
|
|
|
81 |
|
Change in fair value of derivative
instruments: |
|
|
|
|
|
|
Related party |
|
|
(13,950 |
) |
|
|
(12,172 |
) |
|
|
(8,491 |
) |
Others |
|
|
34 |
|
|
|
300 |
|
|
|
58 |
|
Interest expense –
related party |
|
|
(8,966 |
) |
|
|
(6,232 |
) |
|
|
(4,955 |
) |
|
|
|
|
|
|
|
Total other
non-operating income (expense) |
|
|
(22,870 |
) |
|
|
(18,094 |
) |
|
|
(13,307 |
) |
|
|
|
|
|
|
|
Loss before income tax
benefit (expense) |
|
|
(40,966 |
) |
|
|
(27,399 |
) |
|
|
(20,911 |
) |
Income tax benefit
(expense) |
|
|
585 |
|
|
|
2,019 |
|
|
|
(28 |
) |
|
|
|
|
|
|
|
Net loss |
$ |
|
(40,381 |
) |
$ |
|
(25,380 |
) |
$ |
|
(20,939 |
) |
|
|
|
|
|
|
|
Net loss per share,
basic and diluted |
$ |
|
(0.67 |
) |
$ |
|
(0.42 |
) |
$ |
|
(0.35 |
) |
Weighted average shares
outstanding, basic and diluted |
|
|
60,687,478 |
|
|
|
60,687,478 |
|
|
|
60,687,478 |
|
|
|
|
|
|
|
|
EMISPHERE TECHNOLOGIES,
INC.CONDENSED BALANCE SHEETS
|
|
December 31, |
|
|
|
2015 |
|
2014 |
|
|
|
(In thousands, except
share data) |
|
ASSETS |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
|
12,898 |
|
$ |
|
3,683 |
|
|
Accounts receivable, net |
|
|
455 |
|
|
|
- |
|
|
Inventories |
|
|
1,340 |
|
|
|
2,068 |
|
|
Prepaid expenses and other current
assets |
|
|
1,081 |
|
|
|
188 |
|
|
|
|
|
|
|
|
Total current assets |
|
|
15,774 |
|
|
|
5,939 |
|
|
Equipment and leasehold
improvements, net |
|
|
12 |
|
|
|
25 |
|
|
Other assets |
|
|
24 |
|
|
|
24 |
|
|
Total assets |
$ |
|
15,810 |
|
|
|
5,988 |
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
|
|
|
Current |
|
|
|
|
|
Accounts payable and accrued
expenses |
$ |
|
2,121 |
|
|
|
1,846 |
|
|
Notes payable, related party net of
related discount |
|
|
7,000 |
|
|
|
|
Deferred revenue – current
portion |
|
|
631 |
|
|
|
- |
|
|
Royalty payable – related
party |
|
|
208 |
|
|
|
- |
|
|
Derivative instruments: |
|
|
|
|
|
Related party |
|
|
12,690 |
|
|
|
5,548 |
|
|
Others |
|
|
205 |
|
|
|
239 |
|
|
|
|
|
|
|
|
Total current liabilities |
|
|
22,855 |
|
|
|
7,633 |
|
|
Notes payable, related
party net of related discount |
|
|
54,172 |
|
|
|
44,546 |
|
|
Derivative instruments
– related party |
|
|
35,071 |
|
|
|
24,133 |
|
|
Deferred revenue |
|
|
55,616 |
|
|
|
41,616 |
|
|
Deferred lease
liability and other liabilities |
|
|
14 |
|
|
|
10 |
|
|
Total liabilities |
|
|
167,728 |
|
|
|
117,938 |
|
|
|
|
|
|
|
|
Commitments and
contingencies |
|
|
- |
|
|
|
- |
|
|
Stockholders’
deficit: |
|
|
|
|
|
Preferred stock, $.01 par value;
authorized 4,000,000 shares at December 31, 2015 and 2014;
issued and outstanding at December 31, 2015 and 2014 – none |
|
|
- |
|
|
|
- |
|
|
Common stock, $.01 par value;
authorized 400,000,000 shares at December 31, 2015 and 2014
issued 60,977,210 shares (60,687,478 outstanding) at December 31,
2015 and 2014 |
|
|
610 |
|
|
|
610 |
|
|
Additional paid-in capital |
|
|
405,944 |
|
|
|
405,531 |
|
|
Accumulated deficit |
|
|
(554,520 |
) |
|
|
(514,139 |
) |
|
Common stock held in treasury, at
cost; 289,732 shares |
|
|
(3,952 |
) |
|
|
(3,952 |
) |
|
|
|
|
|
|
|
Total stockholders’ deficit |
|
|
(151,918 |
) |
|
|
(111,950 |
) |
|
|
|
|
|
|
|
Total liabilities and stockholders’
deficit |
$ |
|
15,810 |
|
$ |
|
5,958 |
|
|
|
|
|
|
|
|
|
|
|
|
COMPANY CONTACTS:
Michael R. Garone, CFO
973.532.8005
mgarone@emisphere.com
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